This Fiscal Note is not an official copy and should not be quoted or cited.
This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0338 - Modifies existing law with respect to small employer, self- employed and individual health insurance policies
COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO.: 1604-06
BILL NO.: HCS for SS for SCS for SB 338
SUBJECT: Creates Mental Health and Chemical Dependency Act
TYPE: Original
DATE: April 28, 1999
FISCAL SUMMARY
|
ESTIMATED NET EFFECT ON STATE FUNDS | |||
| FUND AFFECTED | FY 2000 | FY 2001 | FY 2002 |
| General Revenue | ($37,925) | ($212,992) | ($212,992) |
| All Funds | ($829,855) | ($1,055,576) | ($1,118,910) |
| Conservation Commission | ($100,000) to ($500,000) | ($100,000) to ($500,000) | ($100,000) to ($500,000) |
| Insurance Dedicated | $0 to $21,750 | $0 | $0 |
| Highway | ($735,000) | ($1,307,250) | ($1,356,296) |
| Total Estimated
Net Effect on All State Funds |
($1,681,030) to ($2,102,780) | ($2,675,818) to ($3,075,818) | ($2,788,198) to ($3,188,198) |
|
ESTIMATED NET EFFECT ON FEDERAL FUNDS | |||
| FUND AFFECTED | FY 2000 | FY 2001 | FY 2002 |
| Federal | ($58,112) | ($326,364) | ($326,364) |
| Total Estimated
Net Effect on All Federal Funds |
($58,112) | ($326,364) | ($326,364) |
This fiscal note contains 9 pages.
FISCAL SUMMARY (continued)
|
ESTIMATED NET EFFECT ON LOCAL FUNDS | |||
| FUND AFFECTED | FY 2000 | FY 2001 | FY 2002 |
| Local Government | $0 to ($552,749) | $0 to ($703,096) | $0 to ($745,282) |
Numbers within parentheses: ( ) indicate costs or losses
FISCAL ANALYSIS
ASSUMPTION
Officials from the Department of Mental Health (DMH) indicated for similar proposals that many of the clients that are served by the DMH are those clients that have exhausted their insurance, have no mental health insurance, or have no insurance at all. As a result of expanded mental health and chemical dependency coverage, the DMH may see an increase in insurance collections for clients in state facilities. In addition, DMH may see a decrease in DMH expenditures for clients receiving services by DMH providers. Because of expanded coverage, clients may choose private providers rather than DMH or DMH providers, but this would allow DMH to serve more clients that are in need of DMH services but are on waiting lists. There is also the possibility that as a result of expanded coverage, insurance premiums will increase thus causing clients to drop insurance coverage and could increase DMH expenditures or could reduce DMH insurance collections. Based on all of these variables, DMH assumes the fiscal impact to the department will be negligible.
Officials from the Department of Insurance (INS) stated that for similar proposals there will be increased revenue to the Insurance Dedicated Fund related to the this proposal. The INS assumes revenue amounts will range from a low of $0 to $21,750. This estimate is based on the fact that there are currently 259 Health Insurers and approximately 30 Health Maintenance Organizations (HMO) writing individual and group policies affected by this proposal. Each insurer may submit one or two policy form amendments (one for individual and one for group) to comply with the new mandate. It is anticipated that current appropriations and staff will absorb the work responsibilities for this single proposal. However, if additional proposals are approved during the session, the department may need to request an increase in appropriations due to the combined effect of multiple proposals.
ASSUMPTION (continued)
Officials from the Missouri Consolidated Health Care Plan (MCHCP) did not respond to our request for fiscal impact. However, for a very similar proposal from this session, the MCHCP stated this proposal requires a minimum benefit in any policy covering mental illness, which by definition includes chemical dependency. Coverage for mental illness benefits shall not establish rates, terms, or conditions that place a greater financial burden on the insured than for other physical illness. Different deductibles, co-payments, or co-insurance are permitted. Policies covering state employees are required by the proposal to include coverage for mental illness.
In developing this proposal, the consultant to the Joint Interim Mental Health Insurance Availability Committee projected its realized impact to be equal to one percent of all premiums. The MCHCP stated this proposal limits the types of mental illness covered by the proposal to serious mental disorders listed in the International Classification of Diseases. The limitation would reduce the fiscal impact noted below, but MCHCP is unable to calculate the difference. Oversight, for the purposes of this fiscal note, will use MCHCP's calculation of the costs for this proposal as follows:
STATE:
Total Projected Cost for Insurance in 1999 $140,160,828
Total Projected State Contributions for 1999 $ 99,582,588
Total Projected State Member's Contribution for 1999 $ 40,578,240
A one percent impact could have the following results for the state:
State Member
Contributions Contributions Total
First 10 months $ 829,855 $338,152 $1,168,007
First Full Year $1,055,576 $430,128 $1,485,704
Second Full Year $1,118,910 $455,936 $1,574,846
Oversight will present a total cost to all funds for state government agencies in the MCHCP as $829,855, $1,055,576, and $1,118,910, for FY 2000 to FY 2002, respectively.
ASSUMPTION (continued)
PUBLIC ENTITY:
Total Projected Public Entity Contributions for 1999 $66,329,832
A one percent impact could have the following results for Public Entities:
First 10 months: $552,749
First Full Year $703,096
Second Full Year $745,282
Oversight will present local government costs for this proposal ranging from $0 to the amounts shown above as the local governments would have the option of providing mental health insurance coverage. The proposal requires insurance companies to provide health insurance companies to state employees.
Officials from the Department of Conservation (MDC) stated that for similar proposals the legislation would have some fiscal impact to MDC funds since it would require coverage which exceeds the department's present coverage. The actual impact in incalculable, but would be estimated between $100,000 and $500,000 annually. These costs would be charged to the Conservation Commission Fund.
Officials from the Department of Transportation (MoDOT) stated that in this proposal under the new sections on the Mental Health and Chemical Dependency Insurance Act, mental illness coverage is not required but if provided, the coverage for mental illness can not establish any rate, term or condition that places a greater financial burden for access to evaluation and treatment for mental illness than for access to evaluation and treatment for physical conditions, generally. This prohibition could be used to require our medical plan to raise the maximum limit on mental illness to equal the limit on other medical conditions. However, our medical plan could drop coverage for mental illness.
The MoDOT assumed their medical plan would choose to continue mental health and chemical dependency coverage, so there would be fiscal impact to the plan. Currently the MoDOT medical plan uses the same deductible and co-payments as used for physical conditions, but the MoDOT has a lifetime cap of $25,000 per participant. This proposal would require the MoDOT to remove the cap.
ASSUMPTION (continued)
The MoDOT medical plan actuary estimates this will increase costs by three and a half percent (3 ½ %) of total claims. Total claims for 1998 will be in excess of $36,000,000. Increasing this by 3 ½ % would increase the total medical plan costs by $1,260,000. Seventy-five percent (75%) of the participants in the plan are MoDOT participants. Therefore, the increased cost to the MoDOT medical plan only would be $945,000 annually.
The MoDOT stated with the effective date of January 1, 2000, the estimated impact to their medical plan for 6 months of FY 2000 would be $472,000. Using a 4 percent increase for inflation, the impact for FY 2001 would be $982,800 and for FY 2002 would be $1,022,112. The MoDOT stated that if the state share is increased to cover this cost, then the fiscal impact would be to MoDOT. This cost is chargeable to the Highway Fund.
Officials from the Department of Public Safety - Missouri Highway Patrol (MHP) stated that for similar proposals the legislation would only affect the patrol's insurance plan. The MHP will need to remove the $25,000 per patient lifetime cap for mental illness expenditures. By doing this, the plan estimates a 3.5 % increase in total claims. Total claims for 1998 will be in excess of $36,000,000 and the MHP participants are 25% of the total participants. Therefore, the impact will be $315,000 ($36,000,000 x 3.5% x 25%) for MHP participants. Oversight notes the MHP did not indicate where this cost would be charged. Oversight assumes the Highway Fund would pay the largest majority of the costs. Costs for FY 00 were prorated over 10 months and costs for FY 01 and FY 02 were increased 3 percent each year.
Officials from the Department of Social Services - Division of Medical Services (DMS) stated that for similar proposals, that they administer a managed care program, known as MC+, which contracts with health maintenance organizations (HMOs) for the purpose of providing health care services through capitated rates. A small population of adults covered under the 1115 waiver and served by the MC+ plans will be subject to the provisions of this legislation. Services for these adults include a package of benefits equivalent to theat currently offered to state employees and include co-payments consistent with the state employees health plan.
Mental health and substance abuse services for these 1115 waiver adults are subject to a limitation of 30 inpatient days and 20 outpatient visits. One inpatient day may be traded for two outpatient visits. The proposal states that mental illness benefits provided by subject to the same annual maximums as apply to physical illness benefits. DMS estimates a 1% increase in capitation payments to drop the limitations on mental health and substance abuse services as follows:
ASSUMPTION (continued)
Estimated 1115 waiver adult population in MC+ plans 38,439
Average capitated payment (per member per month) x $112.54
Estimated annual cost $51,911,101
1 % increase $519,111
The fiscal impact is as follows (the costs will be split between state and federal funds):
FY 00 = $96,037 FY 01 = $539,356 FY 02 = $539,356
The evaluation and treatment of mental illness, including chemical dependency, for all other Medicaid recipients is a covered service in the Medicaid program with no maximums applied.
Officials from the Department of Corrections (DOC) did not respond to our request for fiscal impact. However, for a very similar proposal from this session, the DOC assumed that this proposal would not fiscally affect their agency.
Oversight assumes that all small businesses which provide insurance coverage to their employees may be impacted by this proposal. The amount cannot be estimated.
| FISCAL IMPACT - State Government | FY 2000 | FY 2001 | FY 2002 |
| (10 Mo.) | |||
| GENERAL REVENUE FUND | |||
| Costs - Department of Social Services - | |||
| Division of Medical Services | |||
| Medical Assistance Payments | ($37,925) | ($212,992) | ($212,992) |
|
ESTIMATED NET EFFECT ON | |||
| GENERAL REVENUE FUND | ($37,925) | ($212,992) | ($212,992) |
| ALL FUNDS | |||
| Costs - Various Departments | |||
| Increased Insurance Costs | ($829,855) | ($1,055,576) | ($1,118,910) |
|
ESTIMATED NET EFFECT | |||
| ON ALL FUNDS | ($829,855) | ($1,055,576) | ($1,118,910) |
| FISCAL IMPACT - State Government | FY 2000 | FY 2001 | FY 2002 |
| (continued) | (10 Mo.) | ||
| INSURANCE DEDICATED FUND | |||
| Revenue - Department of Insurance | $0 to | ||
| Increased Filing Fees | $21,750 | $0 | $0 |
| NET EFFECT ON INSURANCE | $0 to | ||
| DEDICATED FUND | $21,750 | $0 | $0 |
| HIGHWAY FUND | |||
| Costs - Department of Transportation | |||
| Increased Insurance Costs | ($472,500) | ($982,800) | ($1,022,112) |
| Costs - DPS - Missouri Highway Patrol | |||
| Increased Insurance Costs | ($262,500) | ($324,450) | ($334,184) |
| ESTIMATED EFFECT | |||
| ON HIGHWAY FUND | ($735,000) | ($1,307,250) | ($1,356,296) |
| CONSERVATION COMMISSION FUND | |||
| Costs - Department of Conservation | ($100,000) to | ($100,000) to | ($100,000) to |
| Increased Insurance Costs | ($500,000) | ($500,000) | ($500,000) |
| ESTIMATED EFFECT | ($100,000) | ($100,000) | ($100,000) |
| ON CONSERVATION | to | to | to |
| COMMISSION FUND | ($500,000) | ($500,000) | ($500,000) |
| FEDERAL FUNDS | |||
| Costs - Department of Social Services - | |||
| Division of Medical Services | |||
| Medical Assistance Payments | ($58,112) | ($326,364) | ($326,364) |
|
ESTIMATED NET EFFECT | |||
| ON FEDERAL FUNDS | ($58,112) | ($326,364) | ($326,364) |
| FISCAL IMPACT - Local Government | FY 2000 | FY 2001 | FY 2002 |
| (10 Mo.) | |||
| ALL LOCAL GOVERNMENT FUNDS | |||
| Costs | $0 to | $0 to | $0 to |
| Increased Insurance Premiums | ($552,749) | ($703,096) | ($745,282) |
| ESTIMATED EFFECT ON ALL | $0 to | $0 to | $0 to |
| LOCAL GOVERNMENT FUNDS | ($552,749) | ($703,096) | ($745,282) |
| FISCAL IMPACT - Small Business | |||
| Small businesses providing health insurance to their employee will be fiscally impacted by this proposal. These small businesses may provide additional coverage which may increase their premium rates. The fiscal impact on these small businesses cannot be determined. | |||
DESCRIPTION
This proposal establishes the "Mental Health and Chemical Dependency Insurance Act." Every insurance company shall offer in all health insurance policies coverages for mental illness and chemical dependency. If the policy holder rejects the offer, the coverages shall be governed by this proposal. The insurer may also apply different limits for services rendered by schools or halfway houses, custodial care, and other services which are not medically necessary nor clinically appropriate.
The mental health coverages provided by the policies may be administered by a managed care program. A policyholder may receive a waiver he/she demonstrates to the director of the department of insurance that compliance with this proposal has resulted in financial hardship. The Director of the Department of Insurance shall conduct a study to assess the impact of the act upon insurers, business interests, providers, and consumers.
All state employee plans shall include coverage for mental illnesses.
A policy is in compliance with this proposal if it is issued by a federally-qualified health maintenance organization. Deductibles, co-payments or coinsurance amounts for access to evaluation and treatment for mental illness shall not be unreasonable in relation to the cost of services provided. This proposal will expire on January 1, 2005.
This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.
SOURCES OF INFORMATION
Department of Mental Health
Department of Insurance
Department of Social Services
Missouri Consolidated Health Care Plan
Department of Public Safety - Missouri Highway Patrol
Department of Transportation
Department of Corrections
Department of Conservation
Jeanne Jarrett, CPA
Director
April 28, 1999